Moscow Finance Hub Hopes Hit by Pension Plan, Deputy Mayor Says

Oct. 4 (Bloomberg) -- Moscow’s chances of becoming an
international financial center will suffer from the Russian
government’s proposal to reduce the amount paid into the funded
part of pension system, Deputy Mayor Andrey Sharonov said.

“This decision concerns not only Moscow, but the whole
country, and it looks like a sacrifice of strategy for the
benefit of tactics,” Sharonov, a former deputy economy minister
and head of investment banking at Troika Dialog, now known as
Sberbank CIB, said in an interview yesterday in Moscow.

Turning the capital into a global hub for finance was a
goal announced by Prime Minister Dmitry Medvedev when he was
president in 2008. His government submitted proposals to
President Vladimir Putin on Oct. 1 for overhauling the nation’s
pension system, including a reduced contribution to the funded
component, triggering criticism from pension funds that the move
would suck up long-term money needed for investment in the
country’s financial markets.

Medvedev’s Cabinet proposed cutting the amount paid into
the savings component to 2 percent, from 6 percent now. The move
had also been opposed by the Finance Ministry, which argued that
it would do little to reduce longer-term imbalances in the
pension system.

Putin, who criticized ministers including Labor Minister
Maxim Topilin for delays on drafting the pension proposals last
month, ordered Medvedev to hold public discussions on the plan
and then submit it to the State Duma, the lower house of
parliament, by Dec. 15.

Keeping Mum

Federal policy makers appear to have gone quiet on plans to
turn Moscow into a financial center able to compete with London,
Sharonov said.

“It’s hard for me to say what the reason is, because the
main sponsor of the whole process still remains Dmitry
Medvedev,” he said. “That said, it’s important to remember
that Moscow also has the obligation and the authority to
contribute to this.”

The city is focused on improving transportation
infrastructure, health care and education, which are also
important in making Moscow an attractive place for international
business, Sharonov said.